Prevention of Money Laundering

Act-2002

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What is Money Laundering?....
• The efforts for legitimizing the illegal money is known
as money laundering .
• Sources of illegal money or ‘Dirty money ‘
– Illegal arms sales
– Smuggling
– Prostitution rings
– Embezzlement
– Insider trading
– Bribery
– Computer frauds,
– Fake Currency Notes circulation,
– Drugs trafficking etc.
• Processing to convert such proceeds of crime, the to make
it appear ‘Legitimate Money’ is Money Laundering
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What is the offence of Money Laundering ?

• Whosoever directly or indirectly attempts to

indulge or knowingly assists or knowingly is a
party or is actually involved in any process or
activity connected with the proceeds of crime
and projecting it as untainted property shall
be guilty of offence of money – laundering.

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Actions which can be taken against persons
involved in Money Laundering?

• Attachment of property. The attached

properties may be confiscated and disposed
off.
• Persons found guilty are punishable with
imprisonment for a term which shall not be
less than three years but may extend up to
seven years and shall also liable to a fine up
to Rs.5 lakhs.

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What is PMLA and its Objective?
• Prevention of Money Laundering Act 2002.
• It has come into effect from 1st July 2005
amended on 1.6.2009
• It extends to whole India including Jammu &
Kashmir.
• To prevent money- laundering and to provide
for confiscation of property derived from, or
involved in, money – laundering.

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Obligations of Department of Posts
• Department has to
– maintain a record of all transactions, the nature
and value of which may be prescribed ( already
prescribed will be discussed in future slides)
– whether such transactions comprise a single
transaction or series of transactions integrally
connected to each other
– furnish such information to the Enforcement
Director within such time prescribed through
Principal Compliance Officer in Postal Directorate
– Records are to be maintained for a period of 5
years
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Implementation of norms in the POs:

• Know Your Customers (KYC)

• Customer Due Diligence (CDD)
– For the purpose of implementations of provisions on
prevention of Money laundering Act, MOF Department of
Economic affairs (Budget division) has formulated the
Prevention of money laundering & combating of financing
Terrorism in small savings schemes. The above norms are
to be applied in Post Office transactions.

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Know your customer

• Three risk categories are defined

• Norms for each category spelt out.

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Risk categories :

Risk Category Accounts opened/Certificate

purchased with initial deposit

Low Risk upto Rs.49,999

Medium Risk Rs.50,000 to Rs.10 lakh

High Risk above Rs.10 lakh

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Medium Risk : Norms
Medium Risk Accounts opened/Certificate purchased with initial
deposit between Rs.50,000 to Rs.10 lakh
Norms Proof
Photograph 1 Recent Photograph(2 in case of EDBO)
In case of SCSS accounts 2 photographs are mandatory

Identity proof PAN or Declaration in Form 60/61,if PAN card not available
then any one of the following :
Electoral Photo identity card, Ration card, Passport,
Driving License, POSB identity card, Govt. Identity card,
(PPO, BPL, Job card).
Address proof Any one of the following :
Electoral Photo identity card, Bank/POSB PB, Current
electricity bill/telephone bill, salary slip of reputed
employer with current address and Aadhar card.

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Low Risk : Norms
Low Risk Accounts opened/Certificate purchased with initial
deposit below Rs.50,000
Norms Proof
Photograph 1 Recent Photograph (2 in case of EDBO)
In case of SCSS accounts 2 photographs are mandatory.

Identity proof Any one of the following :

Electoral Photo identity card, Ration card, Passport, Driving
License, POSB identity card, Govt. Identity card, (PPO, BPL,
Job card). Note: PAN not mandatory.

Address proof Any one of the following :

Electoral Photo identity card, Bank/POSB PB, Current
electricity bill/telephone bill, certificate from any public
authority including area postman GDS or BPM, Aadhar
card.
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High Risk : Norms
High Risk Accounts opened/Certificate purchased with initial deposit
above Rs.10 lakh
Norms Proof
Photograph 1 Recent Photograph (2 in case of EDBO)
In case of SCSS accounts 2 photographs are mandatory.

Identity proof PAN or Declaration in Form 60/61,if PAN card not available then any one
of the following :
Electoral Photo identity card, Ration card, Passport, Driving License,
POSB identity card, Govt. Identity card, (PPO, BPL, Job card).

Address proof Any one of the following :

Electoral Photo identity card, Bank/POSB PB, Current electricity
bill/telephone bill, salary slip of reputed employer with current address
and Aadhar card.
Additional Copy of source of funds and physical verification of address before
opening of account.
requirement
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Clarifications
 Minors - If account/certificate holder is minor, norms are
applicable to guardians
 Joint Holders- In case of joint holders , norms are applicable to
all joint account/certificate holders
 KYC documents already submitted - Customer who have already
submitted KYC documents in any purchase, need not to submit
these again. Account number/purchase application number
through which KYC documents were given earlier to be
mentioned on the account opening / purchase application form.
Note : Name and address of the customer should match with
earlier KYC Documents.
 Deposit is made through agent - The depositor/purchaser as
well as the agent should attest all KYC documents. In case of
direct investment, self attestation or attestation by Gazetted
Officer is required.
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Record Keeping:
• Record keeping and preservation of
documents assumes very high significance in
this exercise.
– How the documents collected for accounts and
certificates of various risk categories should be
handled
– Preservation of records

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Record keeping :
Post Office POSB Accounts
HO KYC documents (including
those received from EDBOs
or SOs )should be attached
with Account Opening Forms
and kept in guard files.
SO For SB/TD/PPF KYC
documents should be
retained in the SO in a guard
file in the custody of SPM
and for RD/MIS/SCSS kept in
guard files a/w SB-3
BO KYC Documents should be
attached with account
opening form and sent to
Account Office.
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Certificates
KYC documents (including received from
EDBOs) should be attached with Purchase
Application Forms and kept in guard files.
KYC documents should be attached with
Purchase Application Forms and kept in
guard files.
KYC Documents should be attached with
Purchase Application form and sent to
Account Office.
1.8.15
Record keeping : Documents
Post POSB Accounts and Certificates Attestation
Office
HO Photo should be pasted with Account APM to Attest
Opening form/purchase application form. photograph from ID
In case of SCSS account one photo to be proof.
pasted in the Pass book.

SO Photo should be pasted in the SS Book in case SPM to Attest

of SB/TD/PPF accounts photograph from ID
• on SB-3 in case of RD/MIS /SCSS accounts proof.
• on purchase application form in case of
certificates.
• For SCSS accounts, one photo to be pasted
in the Pass book
BO One photo should be pasted in SS Book and BPM to Attest
other to be sent to AO a/w SB-3 or purchase photograph from ID
application form. proof.
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Record keeping : Preservation
Details of record Period of
preservation
Record relating to closure of account i.e. SB- 3, SB-7 (a) and KYC 5 years from the date
documents to be preserved by SBCO of closure of account

All Purchase Applications along with KYC documents 5 years after

discharge.

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Process flow of record keeping
• while sealing the daily vouchers, segregate the closed
vouchers & seal them separately along with account opening
form and KYC documents.
All post • These closed vouchers along with LOT & other vouchers will
offices be sent to HO

• HO will seal all closed voucher bundles of SOs and hand over
to SBCO.
• At the time of closure of account of HO also , the account
opening form along with KYC documents should be attached
HO with closure voucher and transferred to SBCO

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Reporting of transactions
Category (Cash Transaction)
All cash transactions exceeding 10,00,000/-
All cash transactions in series which are less than
10,00,000/- at a time but are integrated & total exceeds
10,00,000/- in a month
Method of monitoring
Prepare list & send to :
•Head of Division on 3rd of following month.
•Head of the Division to Circle by 5th
•Head of the Circle to Principal officer at
Directorate by 8th

Category (Suspected Transaction) Method of monitoring

Cash is accepted & Forged or counterfeit currency notes
used or forgery of Security or documents
Any attempted transaction of Forged or counterfeit
currency notes used or forgery of Security or documents
Prepare list & send to :
•Head of Division on the same day.
•Head of the Division to Circle by same day of
receipt from PO
•Head of the Circle to Principal officer at
Directorate by same day of receipt from
Head of the Division.

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Definition of Suspicious transaction
• A transaction including an attempted transaction, whether or
not made in cash which, to a person acting in good faith-
1. gives rise to a reasonable ground of suspicion that it may involve
proceeds of an offence specified in the schedule to the Act
regardless of the value involved
2. appears to be made in circumstances of unusual or unjustified
complexity
3. appears to have no economic rationale or bonafide purpose
4. give rise to a reasonable ground of suspicion that involve financing of
the activities relating to terrorism;
5. Transaction includes deposit, w/d, exchange or transfer of funds
in whatever currency, whether in cash or in cheque payment order or
other instruments or by electronic or other physical
means.

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Instructions for existing Accounts/Certificates

EXISTING ACCOUNTS
Nature of measures Procedure
to be taken
KYC 1 – Give a notice to depositor while making first transaction after this order to
submit KYC documents as per his/her existing balance on next transaction.
2 – Depositor to present KYC documents up to third transaction failing to which
fourth transaction will not be allowed.
3 – in case of RD accounts opened through agent , agent has to attest the
documents .
4 – If depositor has made a fresh investment with KYC documents ,he has to
produce the same pass book/certificate as proof.
5 – Necessary remark to be given in SS book or SB-3 of old account
6 – KYC to be obtained in case of transfer , revival and difference in signature .
Record keeping Same as prescribed for new accounts/certificates.

Reporting Same as prescribed for new accounts/certificates

Suspected Report be sent immediately as prescribed for new customer

transaction
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 Remittances
Domestic/International

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Objective

Antimoney laundering is
applicable to domestic and
international money remittance
also
Know Your Customers (KYC)
Customer Due Diligence (CDD)

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Risk categories :
Risk Category All domestic remittances under
MO,iMO,eMO,VPMO,IPO and FPO which are up
to value

Low Risk (a) of Rs.5000/-

Low Risk (b) above Rs.5000/- and up to Rs.50,000

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 Risk Category All international remittances under
money transfer services like Western
Union, IFS, Money Order Videsh

Medium Risk Up to Rs.10 lakh.

Above Rs.10 lakh.

High Risk

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Low Risk (a) : Norms

Low Risk (a) Category All domestic remittances under

MO,iMO,eMO,VPMO,IPO and FPO which are up to value of
Rs.5000/-

Norms Proof
Photograph

Identity proof

Address proof No KYC required.

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Low Risk (b) : Norms

Low Risk (b) Category -All domestic remittances under

MO,iMO,eMO,VPMO,IPO and FPO which are above Rs.5000/- and up
to Rs.50,000

Norms Proof
Identity proof In case of iMO
Copy of any one of the following ID Proof for the remitter as
well as the payee :
(i)PAN Card (ii) Electoral Photo Identity card (iii) Ration Card
(iv) Passport, Driving License (v) Any Photo Identity card
issued by Central/State Government or PSU.

Address proof In case iMO = Rs 50000

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Medium Risk : Norms
Medium Risk Category: All international remittances under money
transfer services like Western Union, IFS, Money Order Videsh etc.
remittance value up to Rs.10 lakh.

Norms Proof
Identity proof Copy of any one of the following ID Proof for the remitter as well as
the payee :
(i)PAN Card (ii) Electoral Photo Identity card (iii) Ration Card (iv)
Passport, Driving License (v) Any Photo Identity card issued by
Central/State Government or PSU.
Address proof Copy of any one of the following address proof for the remitter as
well as the payee :
Electoral Photo identity card, Bank/POSB PB, Current electricity
bill/telephone bill.

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High Risk :
High Risk Category All international remittances under money transfer services like
Western Union, IFS, Money Order Videsh etc. above Rs.10 lakh

Norms Proof
Identity proof Copy of any one of the following ID Proof for the remitter as well as the payee :
PAN Card (ii) Electoral Photo Identity card (iii) Ration Card (iv) Passport, Driving
License (v) Any Photo Identity card issued by Central/State Government or PSU.

Address proof Copy of any one of the following address proof for the remitter as well as the
payee :
Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone
Physical Verification of bill.
address:- Address of such remitters should be got verified from State Govt./Gram
Panchayat/Postman of that area before acceptance of remittance.

Additional requirement
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PTC, Mys-10 source from which fund are received1.8.29
by remitter.
Record keeping
Post Office Money Remittances

KYC documents should be attached with office copy of

HO booking and payment voucher.

KYC documents should be attached with office copy of

SO booking and payment voucher.

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Reporting of transactions
Category (Cash Transaction)
All cash remittances exceeding 1000000/-
All cash remittances in series which are less
than 1000000/- at a time but are integrated
& total exceeds 1000000/- in a month in the
name of same customer.
Category (Suspected Transaction)
Cash is accepted & Forged or counterfeit
currency notes used or forgery of Security or working day.
documents
Any attempted remittance of Forged or
counterfeit currency notes used or forgery
of Security or documents
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Method of monitoring
Prepare list & send to Head of Division on 3rd of
following month.
Head of the Division to Circle by 5th
Head of the Circle to Principal officer at Directorate by
8th
Method of monitoring
Prepare list & send to Head of Division on next
Head of the Division to Circle by next working day of
receipt from PO
Head of the Circle to Principal officer at Directorate by
next working day of receipt from Head of the Division.
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Penalty
• In case of non-implementation of
AML/CFT norms, a penalty from
Rs.10,000 to Rs. 1,00,000 can be
imposed under PML Act and rules in
addition to disciplinary action.

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